Duchess of Bedford House RTM Company Limited & Ors v Campden Hill Gate Limited

This appeal is concerned with the proper interpretation of a reservation of rights clause in a head lease. The underlying dispute is about car parking.

The Appellants are the owners of long leases of flats at a property known as Duchess of Bedford House in Holland Park. Duchess of Bedford House is a 1930s mansion block which faces onto a private road known as Sheldrake Place East. Sheldrake Place East is part of a garden square known as Sheldrake Place. In the middle of Sheldrake Place are two other mansion blocks known as Campden Hill Gate. The Respondent, Campden Hill Gate Limited (“Campden Hill”), is the head lessee of Campden Hill Gate as well as other parts of Sheldrake Place, including the roads and central gardens.

The Appellants, Duchess of Bedford House RTM Company Limited and four individuals, Fouad Ibrahim, Nikos Kaloyeropoulos, Khosrow Moaveni and Daniela Toledo Hernandez, whom I shall refer to together as the “Appellants”, sought a declaration as to their parking rights in Sheldrake Place. HHJ Gerald found in their favour in relation to parking on Sheldrake Place East. Where necessary, I shall refer to HHJ Gerald’s judgment as “the first judgment”.

Campden Hill appealed. Adam Johnson J allowed the appeal. Amongst other things, he made a declaration that the Appellants (Respondents before him), as flat owners in Duchess of Bedford House, have no right to park on any part of Sheldrake Place. The citation for his careful judgment is [2022] EWHC 2489 (Ch). Where necessary, I shall refer to the Judge’s judgment, as “the judgment”.

The background to this matter is set out at [8]-[17] of the judgment. The essential details are as follows. At all material times, the freehold title to Duchess of Bedford House, Campden Hill Gate and Sheldrake Place has been held by the trustees of the Phillimore Kensington Estate (the “Phillimore Estate”). The Phillimore Estate had granted a long lease of Duchess of Bedford House in 1938 having executed an agreement for a lease in 1929. By 1969, most if not all of the individual flats in Duchess of Bedford House were let out under short, three-year, Rent Act protected tenancies.

In August 1969, the whole of Campden Hill Gate and the roads, garage block and central gardens of Sheldrake Place were demised by the Phillimore Estate to Campden Hill’s predecessor in title, Keston Securities Limited, under a long headlease (with a term of 95 ½ years) dated 11 August 1969 (“the 1969 Headlease”).

Under the 1969 Headlease certain rights were reserved to the Phillimore Estate, as lessor. The precise form of the reservation is central to the appeal and to the way in which this matter was put both before HHJ Gerald and before the Judge. I will set it out in full below.

In October 1973, an application was made for planning permission by the then owner of the 1969 Headlease, Courtfield Securities Limited, to carry out alterations to Sheldrake Place which involved the installation of lockable diagonal parking bays down the western side of Sheldrake Place East (on the side of the road opposite Duchess of Bedford House). The purpose was said to be to control the haphazard parking of cars and a haphazard parking situation. The application was opposed and was refused in March 1974. A subsequent appeal was dismissed. The nature of what was proposed is said to be relevant when applying an iterative approach to the provisions which both HHJ Gerald and the Judge were required to construe.

Also in March 1974, the leasehold structure in relation to Duchess of Bedford House changed. The 1938 leases were surrendered, and the Phillimore Estate entered into a new long lease of Duchess of Bedford House dated 15 March 1974 with London Midland Associated Properties Limited as the headlessee (the “1974 Headlease””).

Over time, the short, Rent Act protected tenancies which had been granted in relation to the flats at Duchess of Bedford House were replaced by long underleases, entered into between about 1974 and 1979. The Appellants are lessees under such long underleases. It was common ground before the Judge that if, in fact, the right to park was passed down to the headlessee of Duchess of Bedford House by means of the 1974 Headlease, then it was further passed down to the individual flat owners on the grant of the long underleases to them over time.

Before turning to the judgment, the grounds of appeal and the Respondent’s Notice, it is helpful to have both section 62 Law of Property Act 1925 and the terms of the relevant clauses in the 1969 and 1974 Headleases in mind. First, section 62(2) provides as follows:

As I have already mentioned, the 1969 Headlease contained a reservation by which the Phillimore Estate reserved to itself, amongst other things:

Before turning to the language of the “carve-out”, it is important to note that the following was expressly included within the demise with which the 1974 Headlease was concerned, namely:

The carve-out follows in the form of a declaration of matters which are not included in the demise. It is in these terms:

In outline, HHJ Gerald held that: (i) based upon the evidence of the parking habits of the residents of Duchess of Bedford House and the application of Newman v Jones, 22 March 1982 (unreported), a right to park on Sheldrake Place East, appurtenant to Duchess of Bedford House existed in 1969; (ii) that right had been reserved to the trustees of the Phillimore Estate as freehold owners of Duchess of Bedford House by the terms of the 1969 Headlease and the effect of the reservation was to convert a de facto right or quasi-easement into a legal easement in favour of the Phillimore Estate as freeholder; and (iii) that that right had passed to the headlessee of Duchess of Bedford House on the grant of the 1974 Headlease.

He went on to hold that the right was not excluded by the Carve-Out Clause. He held that, on its proper construction, the Carve-Out Clause applied to rights which were already subsisting where they “might restrict or prejudicially affect the future rebuilding alteration or development or redevelopment of the Phillimore Estate or any other adjoining or neighbouring property”. However, the right to park was not such a right because a right of way had been granted over the whole of Sheldrake Place East so that for all practical purposes it cannot be altered or developed. The right to park was granted, in effect, on top of the right of way and the right to park makes no difference because the effect of the right of way is that Sheldrake Place East cannot be altered or developed, in any event. Further, since it was common ground that the rights available to the headlessee passed down to the underlessees of individual flats within Duchess of Bedford House on the grant of the long underleases of those flats following the grant of the 1974 Headlease, it followed that the Appellants had the benefit of the right to park.

It was Campden Hill’s appeal from that decision which was heard by the Judge. First, the Judge rejected the ground of appeal that HHJ Gerald’s evaluation of the evidence in relation to parking by the residents of Duchess of Bedford House was wrong and was not open to him. He held that HHJ Gerald “was perfectly well able to find on the evidence that in 1969 a substantial number of Duchess of Bedford House residents who owned a car or vehicle parked it or them in Sheldrake Place East, as did their visitors” [28]-[31]. Although the judge went on to decide that it was likely that HHJ Gerald had fallen into error in assuming that the evidence enabled him to decide that as many as fifteen residents of the centre block of Duchess of Bedford House had cars and parked them in Sheldrake Place East, that did not invalidate his overall conclusion [38] and [43].

Secondly, in relation to the effect of the 1969 Headlease, the Judge held that: the principle in Newman v Jones was capable of existing as a communal right appurtenant to a block such as Duchess of Bedford House which was precisely how HHJ Gerald had approached the matter [57]. It was not necessary for there to have been evidence that all of the tenants parked on Sheldrake Place East [59], only evidence of a settled practice among the tenants [62].

Thirdly, the Judge held that the effect of the reservation in the 1969 Headlease was straightforward. It was common ground that Duchess of Bedford House qualified in 1969 as an “adjoining or neighbouring premises” to Campden Hill Gate and it seemed to him that it was “clear that the right to park, as a right appurtenant to Duchess of Bedford House, was a right “belonging to or enjoyed by” Duchess of Bedford House. Thus, he held that the right to park fell squarely within the express terms of the reservation” [70].

The Judge went on to deal with Mr Holland KC’s point that the right to park could not be an easement because it is too diffuse and general in extent at [73]-[76]. He stated that he did not consider the right to be too vague or diffuse and that it fell within the statement of general principle in Newman v Jones at 27 D-E per Sir Robert Megarry V-C that:

Fourthly, in relation to the effect of the 1974 Headlease, the Judge described the question as whether the right to park, having been reserved in 1969 as a legal easement in favour of Duchess of Bedford House, was then included in the demise by the Phillimore Estate to the new headlessee of Duchess of Bedford House, London Midland Associated Properties Limited, in 1974. He noted at [78] that the parties were agreed that, although any right to park would otherwise have passed to London Midland Associated Properties upon the grant of the 1974 Headlease, whether under the general law or by operation of section 62(2) Law of Property Act 1925, that would not be the case if it was expressly excluded by the Carve Out Clause.

Fifthly, the Judge went on to consider the Carve Out Clause in detail. He stated that it was inelegantly expressed and confusingly, takes with one hand and, gives with the other by which he said that he meant that although the general effect of the language was to exclude a wide category of rights and interests from the overall demise, in the middle of the clause there is an exception from that general exclusion, covering “those now subsisting” [83].

He recorded HHJ Gerald’s approach to the Carve Out Clause and distilled that approach as follows:

He concluded that HHJ Gerald had been correct in his overall view of the way in which the Carve Out Clause was to be construed but was wrong to decide that the right to park was not captured by the second limb [93]. His reasoning in relation to the Carve Out Clause as a whole was as follows:

At [106], the Judge set out HHJ Gerald’s reasoning in relation to the second limb of the Carve Out Clause which was at [88] of the first judgment. In answering the question of whether the right to park fell within the second limb of the Carve Out Clause, HHJ Gerald had stated as follows:

HHJ Gerald also referred to the 1973 planning application to change the layout of Sheldrake Place and concluded that “the mere alteration of the layout of the servient land, provided it does not materially reduce the number of parking spaces, could not be prevented by the existence of the right to park” [90].

The Judge decided that HHJ Gerald had construed the second limb of the Carve Out Clause too restrictively and that if he had given the words their natural and ordinary meaning, he would have concluded that the right to park did fall within the carve out and accordingly, was excluded from the 1974 Headlease [109]. He held that the scope and reach of the second limb was:

He went on to add at [116]:

The Appellants challenge the Judge’s decision on three grounds. It is said that:

Campden Hill’s primary position is that the Judge was right for the reasons he gave. Further, or in the alternative, it also contends that the appeal should be dismissed on additional grounds upon which it is said that the Judge should have allowed its appeal from the decision of HHJ Gerald. Those grounds are elaborated upon and refined in the skeleton argument filed on Campden Hill’s behalf. I refer to those grounds in their refined form. They are:

In the Respondent’s Notice it is stated that it is understood that permission to appeal is not required in relation to the matters which go to the correct construction of the Carve Out Clause set out in [30i)] above. As to matters at [30ii)], it is accepted that they are not the subject of the Appellant’s Notice. However, it is said that those grounds require the examination of Newman v Jones and the application of the principles in that case for the first time by this court and accordingly, these are much more compelling, significant and important points of principle than that for which the Appellants were granted permission to appeal.

If permission to appeal is necessary, the Appellants do not oppose the grant of permission in relation to the matters at [30i)] which go to the proper construction of the Carve Out Clause. They do oppose the matters at [30ii)], however. Mr Francis, on behalf of the Appellants, says that:

We did not hear argument about whether, in fact, any element of the Respondent’s Notice amounts to a cross appeal for which permission to appeal would be necessary or in relation to the test to be applied on a second appeal, in relation to such a cross appeal. Furthermore, the written argument in relation to these issues is very sparse. I note that the relevant issues were considered most recently by this court in Braceurself Ltd v NHS England [2023] EWCA Civ 837 and Wolff v Trinity Logistics USA Inc [2018] EWCA Civ 2765.

In the circumstances, it seems to me that this is not the right opportunity to address those issues further in any depth. Suffice it to say that even if the matters at [30i)] and [30ii)] amount to a true cross appeal, which I doubt, I consider that permission to appeal ought to be granted. They have a real as opposed to a fanciful prospect of success and, if and to the extent that it is necessary, I also consider that they raise important points of principle.

In coming to this conclusion, I take into account the fact that the argument about whether the right to park falls within the reservation of rights because it is said that such a right was not recognised as an easement at the time, is new. Essentially, it is a point of law and there is no suggestion that the Appellants are not in a position to deal with it or that they have acted to their detriment on the faith of an earlier omission to raise it. There is no suggestion that the trial before HHJ Gerald would have taken a different shape if it had. Furthermore, if necessary, the Appellants can be adequately protected in costs. It seems to me that the criteria in Singh v Dass [2019] EWCA Civ 360 per Haddon-Cave LJ at [16]-[18] are satisfied, therefore.

Before turning to the central issues in this appeal, I should mention that the Appellants made an application to rely upon further documents for the purposes of the appeal. We heard short oral submissions and decided that we would not allow the application and would give our reasons in our judgments.

The Appellants sought to rely upon:

It was said that the Appellants wished to rely upon the documents to show that there are utilities serving Duchess of Bedford House beneath Sheldrake Place East. The existence of that infrastructure was said to be relevant to the construction of the Carve Out Clause because the question is whether it operates to prevent the transmission with the leasehold term of subsisting rights. Subsisting rights which were expressly reserved to the Phillimore Estate by the 1969 Headlease included the free running of water, soil, gas and electricity etc. It is said that if Campden Hill’s argument about the proper construction of the Carve Out Clause is correct, it would have operated to prevent the transmission of utilities easements on the grant of the 1974 Headlease. That, it is said, would make no commercial sense.

It is said that this point was made both before HHJ Gerald and the Judge and it was not until receipt of Mr Holland and Ms Lamont’s skeleton argument, on behalf of Campden Hill, that it was contended that all utilities serving Duchess of Bedford House were routed directly from the public highway and did not pass under Sheldrake Place East.

There was no dispute about the test to be applied in relation to the admission of fresh evidence on appeal pursuant to CPR 52.21.(2). In Terluk v Berezovsky [2011] EWCA Civ 1534 (CA) at [31]-[33], Laws LJ (with whom Rafferty LJ and the Chancellor of the High Court agreed) summarised the principles to be applied when determining such applications. He held that the authorities show that the primary rule is given by the discretion in CPR 52.21(2), coupled with the duty to exercise it in accordance with the overriding objective. Consequently the Ladd v Marshall criteria are no longer the primary rule in relation to the court’s power. Those criteria, however, effectively occupy the entire field of relevant considerations, to which the appeal court must have regard when deciding in any given case, whether to exercise the discretion.

As we stated during the hearing of the appeal, we do not consider that the discretion should be exercised to allow the Appellants to adduce this fresh evidence. First, it is accepted that, with reasonable diligence, these documents could have been obtained for use at trial. It is said that they have only become necessary now because the assertion made in Campden Hill’s skeleton argument. It seems to me, in fact, that nothing has changed. The argument presented below appears to have been based upon supposition and surmise and all that Campden Hill now says is that it is its “view” that utilities take a particular route. That is no more than further speculation which is of no assistance to the court one way or another. The position remains that utilities may or may not run under Sheldrake Place East and that possibility is part of the relevant factual matrix when seeking to construe the Carve Out Clause. Secondly, it is not clear that the documents would have an important influence on the issues which we have to decide. On the contrary, the plans may well raise more questions than they answer. Thirdly, although there is no question about the validity of the documents, and therefore, as to their “credibility” in the widest sense, questions may well arise as to their accuracy. Those questions go both to “credibility” and to whether they would have an important influence on the issues in this case. Having taken these matters into consideration, in addition to the lateness of the application, it seems to me that it is not appropriate to exercise our discretion to admit the fresh evidence.

Unless Mr Holland’s submissions are correct, but for the Carve Out Clause, the demise created by the 1974 Headlease would have passed on the benefit of subsisting rights and easements appurtenant to Duchess of Bedford House whether under the general law or by virtue of section 62(2) Law of Property Act 1925 (“section 62(2) LPA”) and elevated them into easements, rights, privileges or advantages enjoyed by the occupiers of Duchess of Bedford House over any retained parts of the Phillimore Estate at the time of the demise.

As the judge observed, the Carve Out Clause is not elegantly drafted. As he also noted, when seeking to interpret the clause it is necessary to apply the well-known principles which are set out in a series of cases including Arnold v Britton [2015] AC 1619 and Wood v Capita Insurance Services Ltd [2017] AC 1173. It is settled law that the court’s task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement and to do so in the context of the agreement as a whole and the relevant admissible background.

Reliance on commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be construed: Arnold v Britton per Lord Neuberger at [17]. As Lord Hodge explained at [11] in Wood v Capita, interpretation is a unitary exercise “and where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense”. But:

The difficulty with the Carve Out Clause stems for the fact that “except those now subsisting” appears in its midst. Mr Francis, on behalf of the Appellants, says that the placing of that phrase should be treated as a drafting infelicity which leaves the meaning of the Carve Out Clause unclear and ambiguous and in order to resolve that ambiguity it should be interpreted as if the phrase had been placed at the end. Mr Francis says that a textual analysis of the Carve Out Clause leaves one uneasy and that it is necessary to turn to the context, the commercial background and the effect of the clause.

In this regard, he drew attention to the similar clause in the 1969 Headlease which he says that the reasonable reader would have in mind. That contained a similar provision, described by Mr Francis as “boiler-plate”, in which the reference to easements, rights and advantages enjoyed by the occupiers or owners of the premises at the date of the deed, is placed at the beginning of the clause. It is as follows:

He also submitted that it was difficult to think of a right which would fall within the exception to the first limb of the Carve Out Clause which would not be caught by the second limb and that is not what can have been intended. He illustrated this by reference to the utilities easements which were reserved to the freeholder, Phillimore Estate, by the 1969 Headlease. He submitted that it is obvious that the headlessee of Duchess of Bedford House would expect to take the benefit of those easements and rights. On Campden Hill’s construction, however, he says that such subsisting rights for the benefit of Duchess of Bedford House would be caught by the Carve Out Clause which cannot have been intended. He says that the Judge did not give sufficient consideration to this nugatory effect when considering commercial common sense.

Bearing all of the relevant principles in mind, it seems to me that the Judge was right to construe the Carve Out Clause as a whole in the way he did. He adopted the formula used by HHJ Gerald. One must begin the process of interpretation by considering the natural and ordinary meaning of the words used as they appear in the clause in question. The fact that the phrase “except those now subsisting” is placed in the middle of the clause must be taken into account. It seems to me that to place the phrase at the end or at the beginning of the clause creates an entirely different meaning. Further, rather than support Mr Francis’ construction, I consider that the fact that the clause in the 1969 Headlease places the reference to existing rights at the beginning militates against a similar construction here. The reasonable reader with the “boiler plate” clause from the 1969 Headlease in mind would consider that the wording adopted in the Carve Out Clause means something different. Had the draftsperson wished to replicate the meaning contained in the 1969 Headlease, they could have done so.

It must also be borne in mind that the 1974 Headlease was made between sophisticated, commercial parties who, no doubt, were advised by experienced professionals and it can be assumed that the Carve Out Clause was the product of negotiation. Furthermore, the two limbs of the Carve Out Clause are not disjunctive. They are different in nature from each other. It seems to me that the reasonable reader, therefore, would not conclude that the liberties, privileges, easements, rights or advantages then subsisting were excepted from both limbs of the clause.

As the Judge pointed out at [103] and [104] of the judgment, the Carve Out Clause appears to be an attempt at a compromise between the competing interests of the freeholder and the headlessee. No new rights would be created by a combination of the 1974 Headlease, the general law and section 62(2) LPA 1925 as a result of a contrary intention and clear words, and subsisting rights would be conveyed unless they might restrict or prejudicially affect any rebuilding or alteration, etc. Such rights would remain in the hands of the Phillimore Estate.

In my judgment, that construction is not undermined by what is said to be commercial or practical reality. Mr Francis said that there may be “utilities easements” under Sheldrake Place which would be excluded from the grant if the Judge were correct. As Lord Neuberger stated in Arnold v Britton at [17], commercial common sense and surrounding circumstances should not be used to undermine and undervalue the importance of the language used. Furthermore, whether such “utilities easements” would be excluded is dependent upon the proper construction and application of the second limb of the Carve Out Clause to which I refer below.

Both the Judge and HHJ Gerald interpreted the phrase “except those now subsisting” which is applied to “liberties, privileges easements, rights or advantages whatsoever” in the Carve Out Clause, to mean rights which already existed in law or in equity appurtenant to any particular property in 1974. (See the judgment at [96]).

Mr Holland submits that, in fact, “now subsisting” has a more restricted meaning. He says that it is a reference to rights (etc) which were expressly granted and enjoyed under the 1938 Headlease. He also says that the right to park, if it existed in 1974, was at most, a settled and perhaps, tolerated practice. It was not permitted and therefore, could not form the basis for a subsisting right.

I agree with Mr Francis in relation to Mr Holland’s submission about the 1938 Headlease. If Mr Holland were correct, only the express right of way granted in 1938 would be caught by the expression. That right of way was also expressly granted in 1974. In such circumstances, there is no basis for the restrictive meaning.

Mr Holland’s submission in relation to the nature of the settled practice and whether parking was permitted is best dealt with in the context of his wider submissions about the reservation of rights in 1969 and the nature of those rights, to which I turn below.

Turning to the second limb of the Carve Out Clause, Mr Francis says that the judge was wrong to place a broad interpretation upon it and placed too much emphasis upon the use of the word “might” in that second limb. He submits that the restrictive interpretation adopted by HHJ Gerald was consistent with the general principle that clear words are required to exclude the operation of section 62(2) LPA. Moreover, he says that the broader interpretation adopted by the judge would mean that subsisting rights of passage of water and electricity, and rights of drainage, through pipes, cable and sewers below Sheldrake Place, essential to the use of Duchess of Bedford House, might be caught by the second limb of the Carve Out Clause based upon potential future developments. In fact, Mr Francis says that it is difficult to see what rights would not be caught by the second limb if it is to be construed as the Judge would have it.

Mr Holland, on behalf of Campden Hill, says that there is no doubt that Campden Hill Gate and Sheldrake Place fall within the definition of “land of the Lessors or forming part of the Phillimore Kensington Estate” and/or “any other adjoining or neighbouring property”. He also notes that the second limb of the Carve Out Clause is widely expressed and, in particular, that it uses the word “might” rather than “would” or “will”.

What is the breadth of the second limb? As I have already mentioned, HHJ Gerald held that for the second limb to be engaged any future alteration or development must be one which was “grounded in reality such that a practical and realistic approach has to be adopted” (first judgment at [89]). The Judge, however, held that the second limb was intended to have a broad scope “capturing any form of rebuilding or alteration etc., perhaps of a nature unforeseen in 1974, which might occur during the 99 year term of the 1974 Headlease.” At [114] (set out at [27] above) he concluded that it was enough if one is able to say that the existence of a right “might” present a problem to a potential future rebuilding or alteration etc. and that was the case here, despite the right of way.

Although I agree with the Judge that the emphasis of the second limb of the Carve Out Clause is upon the right in question rather than the proposed redevelopment or alteration, in my judgment, his interpretation places too much weight upon the use of the word “might” and does not accord with its natural and ordinary meaning, considered in the light of the context and commercial common sense. If the Judge were correct, it is difficult to see that any right (etc) would ever survive it. It renders the exception all but otiose.

It seems to me that if the second limb is read in the context of the Carve Out Clause and the 1974 Headlease, taking into account commercial common sense and the need for clear words to exclude the effect of section 62(2) LPA 1925, its meaning must be approached in the way in which HHJ Gerald held to be the case at [89] of the first judgment. Although the focus is on the right itself, it is tested by reference to whether it might restrict or prejudicially affect “the future rebuilding alteration or development or redevelopment” of the demise or any adjoining or neighbouring property. As HHJ Gerald pointed out, it is always possible to find ways in which the servient land, or land immediately adjoining or neighbouring it can be altered or developed in a way which might be restricted or prejudicially affected by a subsisting right. Instead of taking “might” at its highest, a practical and realistic approach must be adopted and the alteration or development against which the exclusion is tested for the purposes of the second limb of the Carve Out Clause must be grounded in reality. If that were not the case, the second limb has the potential to engulf the remainder of the clause, to create uncertainty and to render the exclusion meaningless. It seems to me, therefore, that HHJ Gerald’s approach to the second limb is to be preferred.

I also agree with Mr Francis that an aspect of the need for any proposal under the second limb of the Carve Out Clause to be ground in reality is that it could not be a proposal which would be contrary to the express grant of the right of way. As Mr Francis also pointed out, such a proposal would be subject to clause 2(9) of the 1969 Headlease which provided that no alteration could take place without the consent of the Phillimore Estate, such consent not to be unreasonably withheld. When determining whether to give consent, the Phillimore Estate would be entitled to take into account its own property interests and the interests of the residents of the Duchess of Bedford House: Iqbal & Ors v Thakrar [2004] 4 ELGR 21 and Hicks v 89 Holland Part (Management) Ltd [2021] Ch 105.

Next, it is said that the Judge was wrong to interfere with what are described as the findings and evaluative judgment of the HHJ Gerald on the question of whether the right of parking would interfere with the future alteration or development of Sheldrake Place. At [87]-[90] of the first judgment, HHJ Gerald dealt with the matter as follows:

As I have already mentioned, the Judge held at [114] that the right to park might present a problem to any future rebuilding etc., notwithstanding the existence of the right of way and, accordingly, it was excluded from the demise [115]. He noted that he had reached a different view from HHJ Gerald “as a matter of principle”. As an aside, at [116], he noted HHJ Gerald’s reasoning at [90] and went on to state that the 1973 proposal was to reduce the parking bays from 20 or perhaps 27 to 12 and concluded that the reduction was a material one and that the judge was wrong to conclude otherwise.

We heard quite lengthy submissions about the nature of the 1973 scheme and the possible effect on parking availability. They were mostly based upon supposition and surmise from the plans which were submitted with the planning application. There was no witness evidence either before HHJ Gerald or before the Judge about the precise effect of the 12 planned parking bays on the overall availability of parking in Sheldrake Place East.

It seems to me that the Judge was not in a position to decide that the overall availability of parking would be reduced to 12 locked bays and that, therefore, the proposed reduction was material. The Judge appears to have come to this conclusion about the full effect of the proposed 1973 Scheme merely by looking at the plan. In the circumstances, I agree with Mr Francis that the Judge was wrong to interfere with HHJ Gerald’s conclusion in this regard. He had heard all the evidence and had a better understanding of the dynamics of the parking situation in Sheldrake Place East. In any event, the second limb of the Carve Out Clause is not restricted to Sheldrake Place East. It is concerned with rights which might prejudicially affect the demise “or any other adjoining or neighbouring property”.

Furthermore, it seems to me that this a case of “double obiter”. HHJ Gerald had already decided that the right to park could not fall within the second limb of the Carve Out Clause because it was overlayed by the right of way when he commented on the 1973 scheme at [90] of the first judgment and the Judge had already decided that the second limb should be widely construed and was not affected by the right of way and did not need to comment on the example of the proposed 1973 parking scheme.

Lastly, I should add that I do not consider that there is anything in Mr Holland’s points about the reservation in the 1969 Headlease. The 1969 Headlease reserved various rights in favour of the lessor, Phillimore Estate. Sub-paragraph (iii) of the reservation was “all other easements quasi-easements and rights belonging to or enjoyed by any adjoining or neighbouring premises”. Both the Judge, and HHJ Gerald before him, held that on its proper construction, sub-clause (iii) was effective to reserve the right for the residents or occupiers of flats within Duchess of Bedford House to park on Sheldrake Place East. This was based on the settled practice of such residents in the period prior to the grant of the 1969 Headlease.

Mr Holland submits that: the “right” to park could not be a right because, at best, in this case, the practice was only tolerated; that it was not recognised as an easement at the time; and that it could not be a quasi-easement in 1969 because in order to establish such a right, it would have been necessary to have had evidence that each and every flat owner and their respective visitors parked their car in Sheldrake Place East before 1969. There was no such evidence. Mr Holland also submits that, in any event, the principle in Newman v Jones cannot be used to create a right in each of the long leaseholders of flats in Duchess of Bedford House.

I will address his points in relation to the application of the principle in Newman v Jones first. As Mr Holland submits that the principle, if it is one at all, is limited to the particular circumstances of that case, it is important to consider it in some detail. Mr and Mrs Newman were the lessees of a ground floor flat in a block in Torquay. In 1978, they acquired the lease by assignment from the original lessees, Mr and Mrs Morris. Mr and Mrs Morris’s lease was dated 1 November 1973 and the term ran from June 1971. The lease had been granted by a company named Park Hill House Limited which had owned the block of flats since about 1925. It conveyed the freehold of the block of flats to an associated company, Scot Rown Limited in March 1974. Scot Rown Limited assigned the freehold reversion of the block to Mr Jones in December 1977. Amongst other things, a dispute arose about whether Mr and Mrs Newman were entitled to park a car on the forecourt of the block.

Sir Robert Megarry V-C was not persuaded that a right to park had been granted by the express terms of the 1971 lease (25B-D). He was satisfied, however, that it had been granted as a result of the effect of section 62(2) LPA 1925. He noted that the sub-section grants “all . . . privileges, easements, rights, and advantages whatsoever, appertaining or reputed to appertain to the land . . . or at the time of the conveyance demised, occupied or enjoyed with, or reputed or known as part or parcel of or appurtenant to the land . . .” and that “conveyance” includes a lease (section 205(1)(ii) LPA 1925) (25E-F). Having considered the evidence, he held that “ . . . at the time of the grant of the lease to Mr and Mrs Morris there was a settled practice of tenants parking their cars on the forecourt” (26C).

The settled practice was based upon evidence from Mr Morris who said that after moving in, having enquired of his solicitors about parking, he had been told that he could park anywhere and that he and all the other residents parked their cars outside their flats. Each tenant parked on the forecourt as near to his flat as he could. Mr Brown gave similar evidence. He had been the director and had been in control of Park Hill House Limited and Scot Rown Limited, which had owned the freehold reversion until 1997, and also occupied one of the flats. He stated that: residents were allowed to park their cars near the entrances to their flats; that there was room for 10-12 cars; and that although from time to time there were minor difficulties about parking, some residents had no cars, and there was usually enough room for those who did.

Despite noting that there was no “superabundance” of evidence, Sir Robert Megarry V-C held that the evidence was sufficient to “justify holding that at the time of the grant of the lease to Mr and Mrs Morris, there was a settled practice of tenants parking their cars on the forecourt” (26C). The Vice- Chancellor went on to note that when the lease to Mr and Mrs Morris was granted in 1973 most of the other flats in the block had been leased for two years or more and that Flat 1 (Mr and Mrs Newman’s/Mr and Mrs Morris’ flat) had been occupied by a Mrs Clarke under a life tenancy until she died in April 1973. There was some doubt about whether she had had a car, or if she did, whether it was parked on the forecourt. Sir Robert Megarry V-C concluded, however, that: “That, . . . does not seem to me to matter much. The main question is what appertained or was reputed to appertain to Flat No. 1 when the lease was granted in November 1973” (26E).

As to the legal effect of the “settled practice” Sir Robert Megarry V-C held as follows at 26E- 27A:

I agree with the Judge, and with HHJ Gerald before him, that the approach adopted in Newman v Jones was equally applicable here. Although Sir Robert Megarry V-C was concerned with a claim by a tenant of an individual flat in a block against his immediate landlord, he did not confine himself to the circumstances of Flat 1 alone. In the passage I have quoted above, he makes clear that “where there is a block of flats, and the tenants in general regularly park their cars within the curtilage of the block, the liberty, privilege, easement, right or advantage of being allowed to do this will rapidly become regarded as being something which appertains or is reputed to appertain to each of the flats in the block, and as being reputed appurtenant to each of those flats.” As the Judge pointed out there is little or no difference between saying that the right becomes appurtenant to “each” of the flats in a block and that it is appurtenant to the block as a whole. Such an approach is consistent with the fact that the evidence of the settled practice was not limited to the evidence in relation to parking relating to Flat 1. It was of communal parking. It is also consistent with the fact that it was unclear that Mr and Mrs Morris’ predecessor in title, Mrs Clarke, had had a car at all and if she had whether she had parked on the forecourt.

Mr Holland also sought to distinguish Newman v Jones on the basis that it was concerned with a right transferred as a result of section 62(2) LPA 1925 whereas, in this case, we are concerned with whether a right to park in relation to Duchess of Bedford House was reserved by the terms of the reservation at (iii) in the 1969 Headlease. The Vice-Chancellor focused on whether the liberty, privilege, easement, right or advantage “appertained” or was “reputed to appertain” to the flats in the block, and as being “reputed appurtenant” to each of those flats. Mr Holland says that that is different from the enquiry which must be made in relation to an “easement”, “quasi-easement”, or “right belonging to or enjoyed by” adjoining or neighbouring premises. Although the inquiry is not identical, I agree with the Judge that there is no real difference in approach. A settled practice which led to the conclusion that the right to park was appurtenant or reputed to be appurtenant to the flats in Newman v Jones can equally be used to establish a “right or quasi-easement belonging to or enjoyed by” the flats for the purposes of paragraph (iii) in the reservation in the 1969 Headlease.

It follows that I disagree with Mr Holland’s submission that it is necessary to establish that each and every individual tenant parked in Sheldrake Place East in order to establish that a quasi-easement or right to do so existed in 1969 when the reservation was made. Both in this case and in Newman v Jones, the right was communal. It related to the block as a whole. It was not even clear that Mr and Mrs Newman’s predecessor in title had exercised the right at all and the Vice-Chancellor commented that there was not a “superabundance” of evidence. It seems to me that the position is the same here. In order to establish a right belonging to or enjoyed by Duchess of Bedford House, it is unnecessary to establish that each and every leaseholder exercised the right. As the Judge explained, HHJ Gerald was entitled to proceed on the basis that there was evidence of a settled practice by a substantial number of tenants or a substantial number of tenants who owned cars.

As to the “right” itself, it follows from what I have already said that I agree with both the Judge and HHJ Gerald that the wording of paragraph (iii) of the reservation in the 1969 Headlease is wide enough to include a de facto right in the sense of a settled practice which was converted into a legal right on the reservation. Analogous circumstances were considered in Pitt v Buxton [1970] 21 P&CR 127. That was a case in which the court was required to consider whether it was possible to constitute an express regrant of an easement over land conveyed to another in favour of land retained by the use of general words in the conveyance. Russell LJ stated as follows at 133:

Further, in my judgment, there is nothing in Mr Holland’s point that parking in Newman v Jones had been permitted whereas, he says that, at best, it was only tolerated at Duchess of Bedford House. I am not sure about the basis for his submission about toleration. It does not appear that there was evidence that parking was refused. To the contrary, at [57] of the first judgment, HHJ Gerald recorded that neither Ms Loverdos nor Mr Wolmar, who gave evidence on behalf of the Appellants, accepted that in 1969 and before that the head porter at Campden Hill Gate had challenged the residents of Duchess of Bedford House who parked on Sheldrake Place East. He went on to consider further evidence and concluded:

There is no basis for Mr Holland’s submission, therefore. Even if there were, it seems to me that he was making a distinction without a difference. In Newman v Jones, Mr and Mrs Newman were told by their solicitors that they could park on the forecourt and at Duchess of Bedford House there is no evidence that the tenants and their visitors were prevented from doing so. There appears to have been no evidence here that parking was under protest: Le Strange v Pettefar [1939] LTR 300.

The last submission which I should address, albeit briefly, is whether the reasonable reader in 1969 would have understood the reservation to extend to an easement to park. This is put on the basis that such a right was not recognised as an easement at the time. It seems to me that, given the breadth of the reservation at (iii), it is unnecessary to decide whether the reasonable reader would have understood a right to park to fall within the reservation of easements. It also referred to “rights belonging to and enjoyed by any adjoining or neighbouring premises” (emphasis added). Even if the reasonable reader would have doubt about whether such a right was an easement, I consider that such a reader would have had no doubt as to the natural and ordinary meaning of “rights belonging to and enjoyed by” and would not have hesitated to say that the right to park on the forecourt in competition with others fell within it. The natural and ordinary meaning of those words as understood in 1969 would have extended to the right to park.

In any event, it is clear from the helpful analysis of the case law conducted by Judge Paul Baker QC, sitting as a High Court Judge in London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd [1992] 1 WLR 1278, at 1284H-1288D, that rights to store goods on another’s land had been recognised since at least 1915 (Attorney-General of Southern Nigeria v John Hold & Co (Liverpool) Ltd [1915] AC 599 per Lord Shaw at 617) and that rights to park were considered in cases in 1939 and 1952 and thereafter, (see Le Strange v Pettefar (1939) 161 LT 300 and Copeland v Greenhalf [1952] Ch 488) albeit that they were rejected on their facts. The right was recognised as being capable of being an easement by the House of Lords in Moncrieff v Jamieson [2007] 1 WLR 2620. It is not necessarily clear, therefore, that the reasonable reader of the 1969 Headlease reading paragraph (iii) of the reservation in 1969 would not have considered that it included a parking easement, if one existed.

For all the reasons referred to above, I would allow the appeal.

I agree.

I also agree.